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The World Price of Insider Trading
Author(s) -
Bhattacharya Utpal,
Daouk Hazem
Publication year - 2002
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/1540-6261.00416
Subject(s) - insider trading , enforcement , equity (law) , insider , stock (firearms) , business , alternative trading system , stock price , phenomenon , algorithmic trading , monetary economics , financial economics , economics , law , finance , political science , paleontology , physics , quantum mechanics , series (stratigraphy) , biology , mechanical engineering , engineering
The existence and the enforcement of insider trading laws in stock markets is a phenomenon of the 1990s. A study of the 103 countries that have stock markets reveals that insider trading laws exist in 87 of them, but enforcement—as evidenced by prosecutions—has taken place in only 38 of them. Before 1990, the respective numbers were 34 and 9. We find that the cost of equity in a country, after controlling for a number of other variables, does not change after the introduction of insider trading laws, but decreases significantly after the first prosecution.